All Forum Posts by: Clint Harris

They will apply in the downtown Wilmington area just like if you owned the property.  It’s all about proximity

Hey Nicole, sorry for the delay, been doing a lot of traveling. OK, I'm actually still on the road, but I'm gonna shoot you the short version. I don't have a problem investing in coastal properties at all. It's really a matter of risk and reward, sure, there is risk, you have hurricanes, in fact, Wilmington North Carolina got hit with one last September and we lost two months of the tourist season. So I just look at that as lumping that in as a capital expense. People are very gentle on the properties, they typically arent doing any cooking or using appliances it or anything like that, but we definitely still have Cap ex, and that's one of them. Yep, beach erosion is a real thing, but tax dollars are usually used to fix that, I invest in areas that take a tax on short term rental income, when the town gets addicted to that revenue, it's very important for them to keep the town nice so the tourist want to continue to visit. Sure, everything could be underwater in 50 years, but I'll be 86 then. That's not really the trajectory that I'm playing. Here's the real difference, I had nine single-family properties in Columbia South Carolina making 5k each annually when paid off, or I could refinance, cannibalize that cash flow, but be able to take that equity and buy another. So the choice was I could have strongish cashflow but have my money stuck in the properties, OR I could refinance, pull my equity out and add more properties to my portfolio. It was one or the other. With STR, someone else pays the mortgage and I build equity every month. On top of that, I make AT LEAST $1000 profit per month per unit. Summertime, we're doing $7000-$8500 gross rents per unit per month. My timelines isn't 50 years, it's more like 3-5. By 2020, we should Be netting 150-200k a year. So for 3 years in a row I take that and I'm invest in LTR multifamily, or self storage, or whatever it may be, in 3-5 we can be done if we want. You're a an accountant, and you are probably very good at risk assessment. Bad things happen, but that's what I insurance is for. If you want to mitigate risk, invest in Gatlinburg or somewhere inland. For me it's all about cash flow, Equity, and appreciation all being in one place. Combination of forced appreciation, and natural appreciation over time from being in a nice area. We can get hit with another hurricane, and that's OK, I have funds set aside for that. Any investment has risk, but there's a big difference in risk, and calculated risk. Even with an increase risk in coastal areas, the 3-5x multiplier in performance with maybe a 10-15% risk increase Ian completely justified. I guess my question if you're investing for 50 years from now would be, how much money do you really want to leave your great grandkids?

Nocole,  I think this is a great question. I do have a response, but unfortunately it’s gonna have to wait a couple days because I’m in the Bahamas right now and don’t have a some of my notes, but frankly I’ve worked through a lot of those metrics. Can’t wait to reach out about this, but at least wanted to let you know that I appreciate this question, and I think it’s intelligent, and I’ll write you back shortly once I have some of the data that I’ve worked through on this. 

 It’s tricky because we buy properties that are being run poorly, and then convert them to with our strategy.  The best metrics for analysis are the Rentalizer analysis through AirDNA.co.  We plug in the address, and it gives us gross rental metrics, including occupancy, seasonality, average daily rate, etc.  and yes, we obviously budget for Cap X, but so far it’s been minimal.  These aren’t long term rental, people almost never use any appliances, and when they visit, they are in the house for 2-4 hours a day, the rest of the time they are out vacationing.  All of those data metrics from AirDNA are scraped from AirBNB, homeaway and booking from actual listings in the previous 365 days as a median performer.  With basing all of our projections on that analysis, that’s how we pick out projects, and so far have easily been able to beat those metrics by 15+%

Nothing crazy, definitely different levels of regulation, usually in areas with high levels of hotel lobby influence. Some variation between city, town, and also broken down by historians district. I've written 2 posts about it before. Short version, look for areas that tax STR, then you're protected.

 Couldn’t agree more. With the leverage of arbitrage, it’s really easy to make 100kna year within 12 to 18 months of leveraging short-term rentals, and completely agree with your strategy, the play from there is to take that money and put it into apartment complexes or high-level multi family units. That’s exactly what we are doing.

 I’m assuming you’re talking about Arbitrage??? Which is a fine strategy, especially when you dont start out with much capital.   After our first duplex purchase our very next deal was an arbitrage triplex. We still run that operation, we pay 36K a year to master lease the entire property, (sandwich lease) and we do 125K a year in gross rents, our net is about 80k.   So that’s great, and certainly helpful to get it started, but I don’t think that’s a way to build a portfolio. There are a lot of different revenue streams with the strategy, sure the cash flow is awesome, but you’re also getting a really strong equity pay down, you also have forced appreciation in the property because of the increase rental income, and then natural appreciation if you’re buying in nice areas where people want to visit. On top of that, with ownership you also have tax benefits, and we started our own property management because we can put all of our listings into one place, and then sell that management company later. You can’t do any of that with arbitrage, you’re leaving a lot of money on the table. 

 You can do a condo, but a multifamily is a better option.  The first door will pay your note and then some, the second and or third unit are all profit.  On a condo, you can pay your bills and maybe make 5k, with a duplex or triplex, you can pay the note, and cash flow 40-60k depending on the analysis 

Yes it would, we don’t even see most of our guests, so they either don’t know we are there, or assume we are renters.  We have sparked up conversation with a handful of people and they all usually seem to think it’s really cool what we’re doing and have always left glowing reviews, so I don’t think it’s an issue.  And yeah, you can absolutely use that househack strategy.  Just keep in mind that most property management companies suck, and they are going to lump your property in with another 300 that they manage.  You can manage it all yourself from your phone in about 5-10 minutes a day 

Well, all of my previous investing got me to point I am now, so I’ll always appreciate that journey, but I definitely wish I had started this 5 years ago.  If I had, honestly I would still do this for fun, but frankly I would be retired.